Ohio's shale boom brightens the commercial real estate market

Bloomberg takes a long look at the extent to which hydraulic fracturing is bringing new development to Ohio, “creating demand for commercial real estate in the region even as landlords struggle to pay off earlier property loans.”Chesapeake Energy Corp., in particular, has acquired $2 billion in land leases comprising 1.35 million acres in Ohio and — despite some of its recent problems — has been a big contributor to an economic recovery in the state. The company has leased or bought real estate in towns including Canton and St. Clairsville.“Thank God for the oil and gas business,” Tim Putnam, president of Putnam Properties Inc., a commercial real estate company based in Canton, tells Bloomberg. “It's created a lot of optimism among people that live here.”Bloomberg notes that Ohio, which had the seventh-highest commercial property delinquency rate in the country in December, according to Moody's Investors Service, is showing signs of marked improvement.“The delinquency rate on commercial mortgages packaged and sold as bonds in Ohio dropped to 8.74 percent in June from 11.28 percent a year earlier, according to data compiled by Bloomberg,” the story finds. Meanwhile, late payments for commercial loans in Youngstown, in the heart of fracking activity in the state, declined to 5.69% in June from 7.75% a year earlier.As a result, Bloomberg notes, Youngstown “is starting to change.” For instance, hotel revenue rose 24% and occupancy gained 19.6% in the Youngstown area in April compared with a year earlier, according to data from Smith Travel Research Inc.

“The shale is just part of the puzzle,” said Michael Moliterno, general manager of the Holiday Inn in Boardman, about five miles from Youngstown. “Overall we're doing well.”

This way to the future

Count CNBC “Mad Money” talker Jim Cramer among those intrigued by the agreement between Westlake-based TravelCenters of America and Shell Oil to build a network of 200 natural gas fueling lanes in at least 100 TravelCenters stations along the U.S. highway system.In this video, Mr. Cramer says investors who are looking to speculate on natural gas-powered vehicles should consider a company called Westport Innovations, which makes the technology that allows engines to run on natural gas. He thinks Westport could benefit big-time from the TravelCenters/Shell agreement.He says the fueling stations in the TravelCenters/Shell deal could be a “tipping point” for the natural gas industry.Mr. Cramer in a separate video segment said Chart Industries Inc. of Garfield Heights also stands to benefit from the deal. Chart makes storage tanks needed to transport liquefied natural gas, as well as the engine tanks for heavy-duty, natural gas-powered trucks.

What's in store?

The U.S. Nuclear Regulatory Commission failed to fully evaluate risks associated with its regulations on the storage of spent nuclear fuel and must draft new ones, an appeals court ruled, according to this story from Bloomberg.The NRC's conclusion that permanent storage will be available in the future when it's needed “didn't account for how its absence could affect the environment now,” the U.S. Court of Appeals in Washington said Monday in deciding a lawsuit brought by New York state. Bloomberg notes that the court said the NRC also failed to fully assess the dangers of storing spent fuel onsite for 60 years after a nuclear plant's license expires.“The commission's evaluation of the risks of spent nuclear fuel is deficient,” Chief Judge David Sentelle wrote for the three-judge panel. Spent fuel “poses a dangerous long-term health and environmental risk,” he added.

Bloomberg notes that spent nuclear fuel refers to fuel rods that, after four to six years of use in a reactor, are no longer efficient at producing energy, according to the court filing. The rods, which still emit dangerous radiation, are transferred to deep-water pools for cooling. They may then be sent to dry storage in concrete and steel casks at the site of the reactor. Onsite storage is the industry's only option “due to the government's failure to establish a final resting place,” Judge Sentelle wrote.Bloomberg quotes an independent nuclear industry analyst as saying the ruling “bolsters the case for a controversial central waste repository in Nevada, and could provide a new argument against relicensing nuclear plants for opponents of atomic energy.”

Quick hits

First Solar Inc. of Tempe, Ariz., a producer of thin-film panels that has its only U.S. manufacturing plant near Toledo, has agreed to build Australia's two largest photovoltaic projects as part of its effort to expand into new markets.The Toledo Blade reports the company plans to construct 106-megawatt and 53-megawatt projects in New South Wales for power distributor AGL Energy Ltd. Terms weren't disclosed.

The Public Utilities Commission of Ohio certified BlueStar Energy Solutions, an affiliate of American Electric Power, to sell natural-gas contracts statewide.BlueStar will act as an alternative to utilities such as Columbia Gas of Ohio. Pat Hemlepp, an AEP spokesman, tells The Toledo Blade that BlueStar probably will begin selling gas in the next few months.You also can follow me on Twitter for more news about business and Northeast Ohio.

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